CEO fights against closure of Argos stores

LONDON--Home Retail, Britain's largest household-goods retailer fighting a slump in sales at its Argos business, will not close stores, its chief executive said, dismissing calls from analysts for a radical change in strategy.

CEO Terry Duddy said the firm had gone through an extensive market-research exercise to find out "what the hell's happening" after sales at Argos stores open over a year fell 9.6 percent in its fiscal first quarter.

That was followed by an 8.6-percent fall in its second quarter.

He said the study concluded its strategy of building a multi-channel business through a nationwide catalogue-based store network and the Internet, and offering greater product choice to attract new customers, was the correct one.

"There were no eurekas ... It was a full and hard check. It was a hard reflection of where we were and it tells us that we believe that actually our strategy's right," he told reporters at a media dinner on Tuesday.

"And we know that that isn't necessarily what everybody wants to hear, because at this level of performance people are expecting a sort of transformation," he said, referring to analyst calls for Argos to dramatically scale down its 754-store portfolio, reduce catalogue sizes and cut its cost base.

Argos Finance Director Matthew Smith said Argos stores typically have 15-year leases and on average have seven years left to run.

"Hypothetically even if we did have lots of loss-making stores, we couldn't exit them anyway," he said, although he did note that 150 store leases are up for renewal over the next five years.

Duddy said he took comfort from data which showed that over a two-year period, Argos had not lost share in the markets it trades in.

"The thing that we've got to do is not just be great in the markets that we're in but get into new markets," he said, pointing to recent investments in TV shopping, mobile phone applications, books and children's wear.

Duddy said Argos is facing structural challenges in the form of intense competition from supermarkets, specialists and Internet players as well as a changing product mix and changing consumer behavior, but said he is confident the firm would still prosper.